Apple May Bring Back Billions In Profits To The U.S. (siliconbeat.com)

An anonymous Slashdot reader quotes a report from the San Jose Mercury News: Apple CEO Tim Cook says the company plans to bring back billions of dollars in profit to the U.S. next year. Cook's statement, made during an interview with RTE radio Thursday, contradicts his previous public statements on the issue: He has said for years that U.S. corporate taxes are too high, and that the Silicon Valley company wouldn't be repatriating profit until its home country changed its tax code.

"Right now I would forecast that we repatriate next year"Cook said, saying that the company has "provisioned several billion" for that purpose.
An interesting side-note: Apple accounts for 40% of Silicon Valley's profits.

Comments

Empty threat

[Anonymous Coward]

Apple just wants to scare the EU, there are plenty of other countries they will hold their money that won't charge as much as the US will.

Re:Empty threat

[Anonymous Coward]

Ireland attracts companies because of their favorable tax rates.

Calling 0.005% tax on global profits (yes, really, not a typo) favorable tax rates is at least an euphemism

did not violate any EU laws.

They argue it that does violate preexisting EU conditions and that is indeed ilegal.

It's amazing the morons in EU\EC think they can harass US companies and not evoke a response from the US.

Roger. We get it.

Re:Empty threat

[jopsen]

It's amazing the morons in EU\EC think they can harass US companies and not evoke a response from the US.

Oh, cry me a river... There are courts in the EU, you are more likely to see your rights honor there than in the US, a country known to deny effective council, torture people and lock up people without trial.

When you workaround taxes in both the EU and US, I for one encourage Vestager to throw the book at you. Really, when a company like Apple decides to test boundaries of the law, Apple should expect the authorities to do exactly the same.

On topic, I'm sure the US generally likes this because without this pressure the money would have stayed in tax shelters. I for one think it's okay to go after companies that are actively speculating against the state, in hope of better future tax breaks...

Re:Empty threat

[ultranova]

Since Europe has not produced any technology firms to compete with US tech companies they are left with shaking down profitable US companies. It's amazing the morons in EU\EC think they can harass US companies and not evoke a response from the US.

And what response would be appropriate for the EU shutting down a tax haven a US company was using to avoid US taxes? A "thank you" note?

Not that Apple is really a US company. It's an international company with zero loyalty to anyone. It deserves none in return.

Re:Empty threat

[Maxo-Texas]

The european commission ruled the 0.005% tax rate was illegal because Ireland only gave it to Apple. They did not give it to other businesses. So it was unfair subsidy to a single business and anticompetitive.

I imagine that the 14.5 billion dollar tax bill is a part of why Tim Cook is getting the money out now. Not all of it, but part of it.

Governments are getting wise to the internet and shutting down these abusive situations where companies book profits or pay 100% of profits as franchise fees to other countries. Companies are cracking down on this and probably in 5-10 years if you sell $10 of product or services in a company, you will pay taxes on $10 dollars worth of gross sales.

Re:Empty threat

[EvilAlphonso]

Ireland attracts companies because of their favorable tax rates. That was not a secret and did not violate any EU laws.

Ireland's corporate tax rate is 12.5%, the second lowest in the world. The EU doesn't have any issue with that rate. What Apple negotiated was an effective 0.005% tax rate instead of the 12.5% rate. Notice that the number is different. What the EU is asking is that Apple pays the 12.5% tax rate as the 0.005% tax rate has been ruled a state subsidy. State subsidies were made illegal inside the EEC (now EU) by the treaty of Rome in 1958. So yes, it does violate a EU law... one of the founding laws of the EU common market.

It will be cheaper to pay US taxes than worry about the EU\EC passing retroactive tax laws and other fines or penalties.

Because it is well known that paying 35% is cheaper than paying 12.5%, which is the tax rate Apple is being asked to pay. Ireland is bound by the treaty of Rome since they joined the EEC in 1973. Apple opened its Irish operations in Ireland after Ireland became a member of the EEC. This has nothing to do with retroactive tax laws, the deal Apple received from the Irish tax authority was illegal from day 1.

The EU is also only asking for the last 10 years of due taxes, instead of all taxes due since the beginning of Apple operations in Ireland.

If Apple doesn't want to pay its taxes in the EU, it is more than welcome to take its ball and GTFO. If Ireland doesn't want to play along with the rules of the EU market, they can also pay back the money they still owe the EU early and GTFO. They have effectively sold the rest of the EU market down the river. I'm sure international companies will still flock to their shores once Ireland is no longer a member of the EU market and the companies can no longer passport activities/taxes from there.

By the way, it is cute that you believe Apple will pay more taxes in the US. According to a senate inquiry in 2013, Apple is using a subsidiary that effectively pays no tax whatsoever in any jurisdiction to shelter a good quarter of its assets. According to the same senate inquiry in 2013, Apple has been funneling money to the Irish operations in order to avoid paying $11bn in taxes a year between 2009 and 2013. Apple is also apparently misreporting to its shareholder the amount of taxes it pays in the US... what they tell their investors is twice the amount that the IRS can account for.

It's amazing the morons in EU\EC think they can harass US companies and not evoke a response from the US.

It's amazing that the morons in global companies think that they are not bound to the laws of the places where they operate. It's equally funny that you still consider Apple an US company when it's currently not producing in the US, has more than twice the assets outside the US than it has in it and its best innovations lately are in the field of tax avoidance. Also, out of curiosity, can you name the last two companies with record fines from the EU for the same type of deal?

Re:Empty threat

[bytesex]

Exactly. The EU's beef is primarily with Ireland, only secondarily with Apple. The thing is: Ireland is a net receiver of EU money. So the EU reasons: if you want subsidies, you have a certain obligation to pick up certain types of money, taxes being one of them. Otherwise it would create a perverse incentive to EU nations: don't collect taxes, let the rest of the EU countries pick up the bill. So the EU demands, in exchange for membership, a tax regime of a certain quality. Since they are the ones paying, they decide. Germany, for example, could decide not to tax Apple a penny, but it wouldn't get a similar frown from the EU, since it's a net payer into the system.

So the EU says to Ireland: collect, or we'll lower your subsidy by an equal amount. And Ireland finds itself caught between a rock and a hard place.

I disagree with the term "back"

[UnknowingFool]

Apple is not bringing "back" profits. That money was never in the US. The money that is in question is profit Apple made on sales overseas in the EU. If the US chose to bring the money into the US, the tax rate would be probably 35% at the top rate. So Apple kept the money overseas and never moved it. Part of it is for operations overseas. Part of it was the tax rate the US would charge.

Re:I disagree with the term "back"

[magarity]

Apple is not bringing "back" profits. That money was never in the US

More Apple shareholders are in the US than elsewhere. In finance terminology, profits are "brought back" to the owners. So the term is correct in this usage.

Re:I disagree with the term "back"

[dbIII]

Actually it was in the US.
Look up "transfer pricing".
It's where things happen like Apple USA buy an iPhone from Apple EIRE at very close to retail price and so on paper make almost zero profit in the USA.
The profit then happens in Ireland where the difference between say $10 per unit and $500 per unit is not taxed much at all due to personal agreements with Irish politicians and some other financial games involving Holland.


The EU is extremely pissed off because they have been propping up Ireland financially while Ireland has been looking the other way at vast amounts of tax revenue that Irish laws say they should be collecting. It's not about 6000 jobs (the usual excuse and most likely an outright lie about the number Apple employ in Ireland), the unpaid taxes could provide that a hundred times over, it would be a money trail leading into the pockets of those Irish politicians who are loudly damning the EU this week for suggesting they tax Apple.

Tactical Move

[ytene]

This announcement makes perfect sense if you think of it as a move in the game of chess between Apple and the EU.

Despite his public proclamations and rhetoric, Tim Cook knows that the EU investigation into the tax deal between Ireland and Apple is absolutely not, "political crap" and he's had now enough time for his lawyers to tell him so. That event is an issue between the EU and Ireland and, in a sense, has nothing to do with Apple. The problem for Cook, then, is what to do? He can't put Apple in the middle of the dispute with the EU. He has no options.

Except one.

He can go to the US government to ask for help. "Hey Barak, that sweet deal we had with Ireland, the one that is letting us be profitable and employ lots of Americans? It's going south. Can you help?"

Obama isn't stupid either. He knows that now that the wheels are in motion, Apple is going to have to pay some taxes to someone - and Obama would rather the someone was the US Federal Government and not the Irish government. So what we're seeing now is Apple asking Washington for help. Washington have said, "Sure, we can help. But of course you're going to have to pay some tax somewhere..."

So Tim Cook has made this announcement about repatriation to show Barak that he's serious. Washington will now attempt to apply pressure to Brussels in order to get the EU to back down and allow Apple to continue to operate across the EU, all whilst paying less than 1% Corporation Tax. Meanwhile, Apple will repatriate some of their profits, which the US will tax, as part of the arrangements.

At least, that's their plan. However, bear in mind that the EU are just in the process of throwing out TTIP, which is going to make any attempt by the US to negotiate forcefully absolutely fraught with danger. The worst possible thing would be for the US to try and apply pressure right now: all they will do is make the entire EU mad at them. The only potential ally they would have had, the UK, is in the process of leaving the EU [with the planned start of Article 50 to commence in the New Year].

But the thing that all us little people need to remember here is that every pound, euro or dollar in tax that Apple "avoids", well that's a pound, euro or dollar that we have to find. When companies don't pull their weight, tax-wise, the private individuals are the ones who get stung. You only need to look at the international tax arrangements of the big multinationals to realise what a joke this process has become. What we need is a clear, internationally-agreed law that says that for tax purposes, a transaction occurs at the location that the buyer initiates the transaction. [ Turning that around, and saying that it is where the seller processes the transaction achieves nothing: Apple and others would just put their transaction processing system in a tax haven ].

The interesting thing is that these practices cost "local" tax payers HUGE amounts of extra taxes. So it's entirely possible that what we're seeing here could set a precedent that benefits 500 million people across the EU... Let's hope so...

Re:How does it contradict?

[fluffernutter]

You talk like they actually pay that rate.

Re:He's just changing robbers.

[Anonymous Coward]

If you want to live in a civilised society, taxes are the price you pay.

Lower Corporate Tax Rate

[nehumanuscrede]

I would be all for lowering their taxes, on one condition.

American workers only within the US.

You want the tax breaks ? You quit going the H1B route cheating the US workforce out of a job.

You hire foreign labor ? Your tax rate will increase to compensate. Pretty simple. Do the math, set the rates to make hiring US workers a financial win for the company. Price of doing business in the US I'm afraid.

Don't like it ? Move your company to India or Ireland or wherever you want. See how well you do when you're denied access to the US market.

Those that are gaming the system can just gtfo or deal with the tax man.

Re:U.S. Corporations need to pay U.S. taxes.

[Rakshasa Taisab]

One of the most fucked up parts of being an U.S. citizen is that even if you work, live, breath on foreign soil you still need to report everything to the US tax office.

Basically the only country in the world that will keep fucking you over even after you try to leave it behind for ever. Glad I'm not a 'citizen'.

Re:Trump 2016!

[nospam007]

"Make America great again! Lower takes and make other countries pay for our walls!"

Since you obviously don't even know how 'taxes' is spelled it raises the question:

Is that you, Donald?

Re:rats fleeing the sinking ship

[nospam007]

"it means exactly as it was meant to mean. They made an illegal deal with the Irish government to act as a tax haven to shelter their earnings from other countries. You can call it profit shifting, tax minimisation or whatever the hell you want, but it has been declared illegal finally and I call it theft."

Not at all, it has been considered as an illegal subsidy/gift _from_ Ireland to Apple and the Irish are now 'forced' to ask for that 'gift' back, just like other countries before them.

Proit

[ledow]

It's easy to make more profit than your competitors when you're aren't paying any tax, in any country that you operate in.

Strangely bad for PR when it gets on the news, though. And strangely ends up changing from a hush-hush golf-and-a-posh-meal secret deal with the local ministers to laws being changed to prevent it happening when it does make the news.

Starbucks found that out in the UK.

So, technically, Apple don't make 40% of the profits in the Silicon Valley. Because those profits aren't properly taxed. And they aren't registered as profit in Silicon Valley at all. They are registered as profit only in Ireland. Which was charging them basically 0% tax. They are the LEAST profitable company in Silicon Valley, or else the US taxman would have had their share a long time ago.

But they are in fact the most profitable in Ireland, while also being the least taxed. Strange that.

I could earn twice what I do if I didn't have to pay tax.

And I could make any company outstrip all its competitors if it didn't have to pay tax (get company, make no changes, stop paying tax, bang, you just doubled your profit most likely, and can lower prices or buy suppliers to put your competitors out of the market).

I'm much more interested in an article entitled "Who pays the most tax in Silicon Valley?"

Re:U.S. Corporations need to pay U.S. taxes.

[ledow]

Demonstrating, yet again, that the US only cares about its own, and nothing and nobody else. Such an insular country and people, obsessed with money (you mention rich foreigners, nowhere do you discuss any other aspect they may have).

And who the hell wants a baby that's going to be taxed when it's born to foreign parents, lived its life on foreign soil, and never knew the US at all? That's baby tourism. What you're talking about before that is actually immigration, which is universal (they are 30,000 people in France at the moment trying to get to the UK, the demand has little to do with it being a benefit to the country they are trying to get to).

Those people coming in to the US, they have citizenship of other countries. Those countries - without exception - do not tax them while they spend their lives in the US. The US tax people who have left the US, however. Until their denounce their citizenships entirely.

This means that your students never stray outside your borders. They can't. They can't afford to be taxed by others and by the US at the same time.

This means that your professors and other academics cannot travel and work outside the US. Not without being penalised much more than their peers in other countries, or denouncing their citizenship - which is a one-way street. If they want to go work on a project on an Australian telescope, they are double-taxed all they time they do, unless they decide to leave the US permanently and live and work in the other hundreds of countries the world over that don't do that to them.

What you've got is a system that keeps all the worst - the "baby tourists", the illegal immigrants, the jobless and the stupid - and punishes anyone who wants to see the world, work internationally, or do any kind of international collaboration. It's called brain-drain and double-taxation is the PERFECT way to cause it.

And the problem is that it's a self-reinforcing problem. The more stupid people that stay and the more clever, innovative, and internationally-demanded that leave, the more people left behind think it's a "good thing", and you end up with a Donald Trump situation where the whole world are looking at you thinking "You fucking idiots" and yet half your country are cheering him on because everyone with a brain already left or will be forced out.

You're not alone - Brexit is going to have roughly the same effect unless they can guarantee rights for EU people already working here, but we're not stupid enough to tax them for even trying to go and work with the rest of the world

My girlfriend is a Dr (which means something over here), and Italian - Italy PAID HER to come to the UK. They PAID HER to study here. They do not tax her while she's not at home. The UK PAY HER over the odds to come here, as only a handful of people can do her job, which is taxed in the UK only.

She works in a NHS hospital diagnosing genetic diseases and cancers.

Her friends, almost to a person, are all EU, or foreign citizens. Mexico, Spain, France, Italy, Romania, Poland, Russia. They ALL PAID their people to come to the UK, get educations, make the big bucks and send money home. Because they know that nothing beats international experience, recognition, education and talent. They don't tax anything while they're not on their home soil.

Those people are going to retire back to the country, or they are going to qualify quickly and bring back foreign expertise, techniques, standards and better ways of doing things - for free. They are going to earn bigger money than their home countries could afford (my gf literally laughs at what Italy will pay her to do the same job over there) and send it home. And they will have well-rounded, collaborative careers.

The US are basically fining people for wanting to go to the rest of the world. You can't study abroad. You can't work abroad. Even places like China and Korea don't stop that for their academics. Hell, you get less holidays than just about every other country in the

Re:He's just changing robbers.

[Required Snark]

If you can't tell the difference between organized crime and a functioning democracy they you are deranged.

You want freedom from government interference? Move to Somalia, central Mexico dominated by drug cartels or Southeast Asia where they grow opium. No "oppressive" government there.

In contrast consider Norway. I've been there and it is one of the best run societies I have ever seen. Lot of government regulation and it always ranks near or at the top for overall quality of life.

Since things in the US suck so much because of the "ebil gumment" why don't you "self deport" and go to one of the Libertard havens that exist all over the world? Since all problems result from government interfering with your precious sovereign liberty, you should be about to create a paradise on earth anywhere there is no effective central control. Parts of North Africa are lawless right now, and with the recent death of Uzbekistan's dictator I bet you and your best Libertarian buds could go over their and create the perfect society.

Can you leave tomorrow? I'd be happy to drive you to the airport. Don't let the door hit your ass on the way out.

Re:He's just changing robbers.

[Zontar The Mindless]

Sigh. There are many on the American right who try to lecture us on places they've obviously never been, based on a few factoids cherry-picked from Wikipedia.

Re: How does it contradict?

[Imbrondir]

I`m no tax expert but I believe it`s done like this:

• 1) Buy services or import overpriced goods from a business you own in a tax haven.
• 2) Scale the above till you barely profit in the high tax country, but have massive profits in the low tax country
• 3) Pay low income taxes in the low tax country
• 4) Profit!

I believe you will not have to pay income taxes more than once. At least as long as you keep the money in the business set up in the low tax country.

Re:He's just changing robbers.

[Gussington]

In summary, what works in Norway does not and will not work here in the United States,

Because?

unless you believe that the US government should be run entirely according to the culture, traditions and ideas of northern European white men. Funny, but that doesn't strike me as a very liberal idea and yet the liberals keep gushing about Norway. Go figure.

There is a strong correlation between countries that use regulations to improve quality of life and succeed, and those that don't and don't. The American fascination with "freedom" is causing a lot of your problems.

Re:He's just changing robbers.

[Gussington]

But it's not just Norway is it?
If you ever keep an eye on those OECD comparison things, there's a whole host of countries that do consistently better than the US on education, health, crime, corruption, social welfare, life expectancy etc. So take Norway out, let's compare Sweden, Denmark, Netherlands, France, Germany, UK, Ireland, Iceland, Canada, Australia, New Zealand, Hong Kong, Singapore, Japan etc etc and you will see a strong correlation between appropriate regulation and quality of life.
Conversely if you look at the worst places in the world, Somalia, Sierra Leone, Afghanistan etc they all have next to no rules, you can do what ever you an get away with and the people suffer as a consequence.
The US is the richest nation on earth with the most abundant natural resources. It should win at everything, but it doesn't.
Why do you think that is?